Asia pacific journal of information systems

  • 제32권4호
  • /
  • Pages.707-727
  • /
  • 2022
  • /
  • 2288-5404(pISSN)
  • /
  • 2288-6818(eISSN)
한국경영정보학회 (The Korea Society of Management Information Systems)
권호 표지
DOI QR코드

DOI QR Code

IT Investment and Financial Performance Volatility: The Moderating Role of Industry Environment and IT Strategy Emphasis

  • Wahyu Agus Winarno (Accounting Department, University of Jember) ;
  • Slamin (Faculty of Computer Science, University of Jember)
  • 투고 : 2021.09.03
  • 심사 : 2022.07.19
  • 발행 : 2022.12.31
PDF 다운로드
⟨ 이전 논문 다음 논문 ⟩

초록

Industrial revolution 4.0 makes business competition more challenging and will impact the instability of the company's financial performance. Dynamic environmental conditions make it difficult for companies to make predictions in making decisions. Investing in information technology (IT) is one way for companies to maintain financial stability and competitive advantage in dynamic competition. Resource-Based Theory (RBT) explains that information technology (IT) is a resource that can create a competitive advantage for the company. This study aims to examine the moderating role of dynamic industrial environments and IT strategic emphasis on the relationship between a lag effect of IT investment and firm's financial performance volatility. Using the data of companies listed on the Indonesia Stock Exchange (IDX) for five years starting from 2013-2017, the method used to estimate the research model's parameters is the generalized method of moments (GMM) approach. The results show that the industrial environment and the emphasis on IT strategy have a role in moderating and strengthening the relationship between the time lag in IT investment in reducing the firm's financial performance volatility.

키워드

과제정보

We thank the Editor-in-Chief, the Associate Editor, and the reviewers for their insight and helpful suggestions. We are also grateful to Michael Chandra and Kanzulia for their helpful research assistance.

참고문헌

  1. Aral, S., and Weill, P. (2007). IT assets, organizational capabilities, and firm performance: How resource allocations and organizational differences explain performance variation. Organization Science, 18(5), 763-780.  https://doi.org/10.1287/orsc.1070.0306
  2. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.  https://doi.org/10.1177/014920639101700108
  3. Baron, R. M., and Kenny, D. A. (1986). The moderator -mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173. 
  4. Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, 24(1), 169-196.  https://doi.org/10.2307/3250983
  5. Bharadwaj, A. S., Bharadwaj, S. G., and Konsynski, B. R. (1999). Information technology effects on firm performance as measured by Tobin's q. Management Science, 45(7), 1008-1024.  https://doi.org/10.1287/mnsc.45.7.1008
  6. Bond, S. R. (2002). Dynamic panel data models: a guide to micro data methods and practice. Portuguese Economic Journal, 1(2), 141-162.  https://doi.org/10.1007/s10258-002-0009-9
  7. Brynjolfsson, E. (1993). The productivity paradox of information technology. Communications of the ACM, 36(12), 66-77.  https://doi.org/10.1145/163298.163309
  8. Campbell, M. (2012). What a Difference a Year Makes: time lag effect of information technology investment on firm performance. Journal of Organizational Computing and Electronic Commerce, 22(3), 237-255.  https://doi.org/10.1080/10919392.2012.696944
  9. Chae, H. C., Koh, C. E., and Prybutok, V. R. (2014). Information technology capability and firm performance: Contradictory findings and their possible causes. MIS Quarterly, 38(1), 305-326.  https://doi.org/10.25300/MISQ/2014/38.1.14
  10. Chari, M. D. R., Devaraj, S., and David, P. (2008). Research note-The impact of information technology investments and diversification strategies on firm performance. Management Science, 54(1), 224-234.  https://doi.org/10.1287/mnsc.1070.0743
  11. Chen, J. V., Su, B. C., and Hiele, T. M. (2017). The impact of IT-coordination costs on firm size and productivity: Transaction cost perspective. International Journal of Electronic Commerce, 21(1), 99-127.  https://doi.org/10.1080/10864415.2016.1204191
  12. Chenhall, R. H. (2007). Theorizing contingencies in management control systems research. Handbooks of Management Accounting Research, 1, 163-205.  https://doi.org/10.1016/S1751-3243(06)01006-6
  13. Cline, M. K., and Guynes, C. S. (2001). A study of the impact of information technology investment on firm performance. The Journal of Computer Information Systems, 41(3), 15-19. 
  14. Dechow, P., Ge, W., and Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3), 344-401.  https://doi.org/10.1016/j.jacceco.2010.09.001
  15. Devaraj, S., and Kohli, R. (2003). Performance impacts of information technology: Is actual usage the missing link? Management Science, 49(3), 273-289.  https://doi.org/10.1287/mnsc.49.3.273.12736
  16. Ensley, M. D., Pearce, C. L., and Hmieleski, K. M. (2006). The moderating effect of environmental dynamism on the relationship between entrepreneur leadership behavior and new venture performance. Journal of Business Venturing, 21(2), 243-263.  https://doi.org/10.1016/j.jbusvent.2005.04.006
  17. Havakhor, T., Sabherwal, R., Steelman, Z. R., and Sabherwal, S. (2019). Relationships between information technology and other investments: A contingent interaction model. Information Systems Research, 30(1), 291-305.  https://doi.org/10.1287/isre.2018.0803
  18. Hawawini, G., Subramanian, V., and Verdin, P. (2003). Is performance driven by industry or firm specific factors? A new look at the evidence. Strategic Management Journal, 24(1), 1-16.  https://doi.org/10.1002/smj.278
  19. Hitt, L. M., and Brynjolfsson, E. (1996). Productivity, business profitability, and consumer surplus: Three different measures of information technology value. MIS Quarterly, 20(2), 121-142.  https://doi.org/10.2307/249475
  20. Kappelman, L., Johnson, V., Maurer, C., McLean, E., Torres, R., David, A., and Quynh, N. (2018). The 2017 SIM IT issues and trends study. MIS Quarterly Executive, 17(1), 53-88. 
  21. Karanja, E., and Bhatt, G. D. (2014). The role of IT investments in fostering firm innovations: An empirical study. Journal of Business Management, 20(2), 25. 
  22. Khallaf, A., Omran, M. A., and Zakaria, T. (2017). Explaining the inconsistent results of the impact of information technology investments on firm performance-A longitudinal analysis. Journal of Accounting & Organizational Change, 13(1), 00-00. 
  23. Khuntia, J., Saldanha, T. J. V., Mithas, S., and Sambamurthy, V. (2018). Information technology and sustainability: Evidence from an emerging economy. Production and Operations Management, 27(4), 756-773.  https://doi.org/10.1111/poms.12822
  24. Kim, K., Mithas, S., and Kimbrough, M. (2017). Information technology investments and firm risk across industries: Evidence from the bond market. MIS Quarterly, 41(4), 1347-1367.  https://doi.org/10.25300/MISQ/2017/41.4.15
  25. Kobelsky, K., Hunter, S., and Richardson, V. J. (2008a). Information technology, contextual factors and the volatility of firm performance. International Journal of Accounting Information Systems, 9(3), 154-174.  https://doi.org/10.1016/j.accinf.2008.02.002
  26. Kobelsky, K., V. J. Richardson, R. E. Smith, and Zmud, R. W. (2008b). Determinants and consequences of firm information technology budgets. The Accounting Review, 83(4), 957-995.  https://doi.org/10.2308/accr.2008.83.4.957
  27. Lee, S., and Kim, S. H. (2006). A lag effect of IT investment on firm performance. Information Resources Management Journal, 19(1), 43-69.  https://doi.org/10.4018/irmj.2006010103
  28. Li, M., and Ye, L. R. (1999). Information technology and firm performance: Linking with environmental, strategic and managerial contexts. Information & Management, 35(1), 43-51.  https://doi.org/10.1016/S0378-7206(98)00075-5
  29. Liang, T. P., You, J. J., and Liu, C. C. (2010). A resource-based perspective on information technology and firm performance: A meta analysis. Industrial Management & Data Systems, 110(8), 1138-1158.  https://doi.org/10.1108/02635571011077807
  30. Lim, J. H., Dehning, B., Richardson, V. J., and Smith, R. E. (2011). A meta-analysis of the effects of IT investment on firm financial performance. Journal of Information Systems, 25(2), 145-169.  https://doi.org/10.2308/isys-10125
  31. Mithas, S., and Rust, R. T. (2016). How information technology strategy and investments influence firm performance: Conjecture and empirical evidence. MIS Quarterly, 40(1), 223-245.  https://doi.org/10.25300/MISQ/2016/40.1.10
  32. Mithas, S., Tafti, A., and Mitchell, W. (2013). How a firm's competitive environment and digital strategic posture influence digital business strategy. MIS Quarterly, 37(2), 511-536.  https://doi.org/10.25300/MISQ/2013/37.2.09
  33. Nelson, M. W., and Skinner, D. J. (2013). How should we think about earnings quality? A discussion of "Earnings quality: Evidence from the field". Journal of Accounting and Economics, 56(2-3), 34-41.  https://doi.org/10.1016/j.jacceco.2013.10.003
  34. Ranganathan, C., and Brown, C. V. (2006). ERP investments and the market value of firms: Toward an understanding of influential ERP project variables. Information Systems Research, 17(2), 145-161.  https://doi.org/10.1287/isre.1060.0084
  35. Ravichandran, T., Liu, Y., Han, S., and Hasan, I. (2009). Diversification and firm performance: Exploring the moderating effects of information technology spending. Journal of Management Information Systems, 25(4), 205-240.  https://doi.org/10.2753/MIS0742-1222250407
  36. Revilla, A., Fernandez, Z. J. I., and Innovation. (2013). Environmental dynamism, firm size and the economic productivity of R&D. Industry and Innovation, 20(6), 503-522. https://doi.org/10.1080/13662716.2013.833374 
  37. Roberts, P. W. (2001). Innovation and firm-level persistent profitability: A Schumpeterian framework. Managerial and Decision Economics, 22(4-5), 239-250.  https://doi.org/10.1002/mde.1018
  38. Sabherwal, R., Sabherwal, S., Havakhor, T., and Steelman, Z. (2019). How does strategic alignment affect firm performance? The roles of information technology investment and environmental uncertainty. MIS Quarterly, 43(2), 453-474.  https://doi.org/10.25300/MISQ/2019/13626
  39. Shaft, T., Zmud, R., and Dao, V. (2007). An examination of lag effects in relationships between information technology investment and firm-level performance. ICIS 2007 Proceedings, 135. 
  40. Steelman, Z. R., Havakhor, T., Sabherwal, R., and Sabherwal, S. (2019). Performance consequences of information technology investments: Implications of emphasizing new or current information technologies. Information Systems Research, 30(1), 204-218.  https://doi.org/10.1287/isre.2018.0798
  41. Stoel, M. D., and Muhanna, W. A. (2009). IT capabilities and firm performance: A contingency analysis of the role of industry and IT capability type. Information & Management, 46(3), 181-189.  https://doi.org/10.1016/j.im.2008.10.002
  42. Thakurta, R., and Guha Deb, S. (2018). IS/IT investments and firm performance: Indian evidence. Journal of Global Information Technology Management, 21(3), 188-207.  https://doi.org/10.1080/1097198X.2018.1498274
  43. Ullah, S., Akhtar, P., and Zaefarian, G. J. I. M. M. (2018). Dealing with endogeneity bias: The generalized method of moments (GMM) for panel data. Industrial Marketing Management, 71, 69-78.  https://doi.org/10.1016/j.indmarman.2017.11.010
  44. Wade, M., and Hulland, J. (2004). Review: The resource-based view and information systems research: Review, extension, and suggestions for future research. MIS Quarterly, 28(1), 107-142.  https://doi.org/10.2307/25148626
  45. Wang, Q., Lai, F., and Zhao, X. (2008). The impact of information technology on the financial performance of third-party logistics firms in China. Supply Chain Management: An International Journal, 13(2), 138-150.  https://doi.org/10.1108/13598540810860976
  46. Winarno, W. A. (2019). Hubungan Non Linier Antara Lag Waktu Investasi Teknologi Informasi dengan Kinerja Perusahaan Sesuaian Industri. Dissertation, Accounting, Universitas Airlangga, Surabaya, Indonesia. 
  47. Winarno, W. A., and Tjahjadi, B. (2017). The moderating effect of industry environments on the relationship between IT asset portfolios, efficiency and innovation in the ERP context. European Research Studies Journal, 20(2), 3-15. 
  48. Winarno, W. A., Tjahjadi, B., and Irwanto, A. (2021). Time lag effects of IT investment on firm performance: Evidence form Indonesia. Jurnal Ekonomi Malaysia, 55(3), 89-101.  https://doi.org/10.17576/JEM-2021-5503-06
  49. Xue, L., Ray, G., and Sambamurthy, V. (2012). Efficiency or innovation: How do industry environments moderate the effects of firms' IT asset portfolios? MIS Quarterly, 36(2), 509-528.  https://doi.org/10.2307/41703465
  50. Yu, G., Kwon, K. M., Lee, J., and Jung, H. (2016). Exploration and exploitation as antecedents of environmental performance: The moderating effect of technological dynamism and firm size. Sustainability, 8(3), 200. 
  51. Zhu, Z., and Huang, F. (2012). The effect of R&D investment on firms' financial performance: Evidence from the Chinese listed IT firms. Modern Economy, 3, 915-919. https://doi.org/10.4236/me.2012.38114